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ESMA consults on measures for CCPs to manage conflicts of interest

01 June 2017

The European Securities and Markets Authority (ESMA) opened today a public consultation on future guidelines, which further clarify provisions stemming from the European Market Infrastructure Regulation (EMIR).

ESMA’s consultation asks stakeholders feedback on a set of proposed provisions regarding the management and avoidance of conflicts of interests by central counterparties (CCPs).

Under EMIR, CCPs have to act in the best interests of their clearing members and the clients. Therefore, CCPs need to put in place robust organisational arrangements and policies to prevent potential conflicts of interest and to solve them should they occur.

ESMA future guidelines deal with provisions on the management of conflicts of interest such as:

  • written arrangements to identify and manage any potential conflicts of interest between CCPs, clearing members and clients;
  • where written arrangements are not sufficient, disclosure of conflicts of interest to the clearing member or clients prior to new transactions; and
  • taking into account possible conflicts with a CCP’s parent undertaking or subsidiary.

Conflicts of interest exist when a stakeholder’s own interests interfere with the CCP’s interests or the CCP’s clearing members’ or clients’ interests.

ESMA will consider all comments received to its consultation by 24 August 2017, which it will use to finalise the guidelines.